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26 June 2025

New Jersey adopts new and amended corporate business tax regulations

The New Jersey Division of Taxation has adopted, without change, proposed regulations that create new and amend existing corporate business tax (CBT) regulations. The new and amended regulations implement recent statutory changes to the CBT, including changes made by P.L. 2022, c. 133 (signed December 22, 2022), P.L. 2023, c. 50 (signed May 8, 2023) and P.L. 2023, c. 96 (signed July 3, 2023). (For more on c.96, see Tax Alert 2023-1182.)

The new and amended regulations took effect on June 16, 2025.

The adopted changes, among other things:

  • Clarify the treatment of net operating losses and their carryovers, more closely aligning the state's provisions with IRC Section 172, and establish a pooling system for combined group members
  • Add a new subsection to incorporate the new bright-line nexus rule and clarify whether activities of unitary partnerships are considered when determining nexus at the corporate owner level
  • Modify and add new definitions related to combined returns and clarify the treatment of, and add definitions for, various entities, such as captive investment companies, captive real estate investment trusts, and captive regulated investment companies
  • Repeal prior rules that set forth the ordering of tax credits and replace them with a simplified method for the use of tax credits, that the taxpayer earned, purchased, or was awarded
  • Prospectively incorporate parts of, and expand on, the Multistate Tax Commission's updated guidelines on P.L. 86-2721
  • Clarify that financial products, instruments and services are not considered tangible personal property
  • Clarify the treatment of IRC Section 959 (previously taxed earnings and profits) dividends
  • Clarify how to source capital gains when they are integrated or not integrated in business and operational income
  • Clarify that capital gains from the sale of bonds, digital assets, or other financial products/instruments sold for trading purposes are not treated as capital gains and includable in the receipts fraction
  • Clarify that a place of business in New Jersey also includes employees who routinely work from home

Several outdated provisions have been repealed, and technical corrections have been made to ensure clarity and compliance with current laws.

For a more detailed discussion of the changes, see Tax Alert 2025-0561.

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Endnote

1 P.L. 86-272 is a federal law prohibiting states from imposing state income tax on out-of-state sellers whose in-state activities do not exceed soliciting orders of tangible personal property. P.L. 86-272 does not apply to sales of intangible property or services.

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Contact Information

For additional information concerning this Alert, please contact:

For New Jersey corporate business income tax

Published by NTD’s Tax Technical Knowledge Services group; Chris DeZinno, legal editor

Document ID: 2025-1364

 

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